One of the first real decisions a California business owner makes is how to structure the company. The two most common choices we set up are the limited liability company (LLC) and the S-corporation, and the right answer depends on how you plan to be taxed, bring in money, and run the business.
An LLC is flexible and simple to maintain. It gives you liability protection, separating your personal assets from the business, with fewer formalities than a corporation. For many owner-operated businesses, it is the natural starting point.
An S-corporation, which is a tax election rather than a separate kind of company, can offer payroll-tax advantages for profitable businesses where the owners pay themselves a reasonable salary. It comes with more formality and stricter rules about who can own it.
Whichever you choose, two things matter in California: keeping the entity in good standing with the Secretary of State, including the periodic Statement of Information, and meeting your obligations with the Franchise Tax Board. Skipping these can quietly undo the protection you set up.
We help you choose the right structure and set it up correctly from the start, then keep it healthy as the business grows. The first conversation is free.
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This article is general information, not legal advice, and does not create an attorney-client relationship. Estate and business law change and depend on your specific situation. Speak with Donald W. Flaig before acting.